Of Typhoons and Toilet Paper

Taiwan has run out of toilet paper.

There had been reports of a looming 30% price hike, followed by stories of people stockpiling.  In the following frenzy, tissue paper and kitchen towels were bought up too, leaving supermarket shelves completely bare of paper products.

The source of the problem was an increase in the price of raw pulp.  But what retailers failed to consider was how their customers would react.

Taiwanese consumers are very price sensitive, and they are used to stocking up to see them through periods of disruption caused by typhoons.  So the behaviour was predictable.

The opposition party in Taiwan is now saying that if the president, Tsai Ing-wen, cannot avert a toilet paper crisis, then she cannot be trusted to manage the country.

Understanding people and processes is key to identifying and analysing risks. A failure to understand customer behaviour can have far-reaching consequences when previously unidentified risks crystallise..

 

Story source: The Economist

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